Analyst: 'Market sentiment is fairly negative'
U.S. stock-market indexes moved between small gains and losses on a light-volume Monday as investors remained cautious amid geopolitical tensions and ongoing domestic political turmoil.
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The large-cap S&P 500 index was up less than a point at 2,426, with 8 of its 11 main sectors trading in positive territory. So-called cyclical sectors, such as technology, financials and energy, led losses, but were balanced out by gains in real estate and telecom, generally considered defensive.
The Nasdaq Composite declined 14 points, or 0.2%, to 6,203.
The Dow Jones Industrial Average , which on Friday logged its largest two-week decline since mid-September, was up 5 points at 21,680, as a sharp drop in Nike Inc.(NKE) continued to weigh on the blue-chip index. Nike fell 2.5% as the stock was downgraded to hold from buy at Jefferies on concern that increased competition in the U.S. is putting growth and margins at risk.
Leading the Dow, shares of Home Depot Inc.(HD) advanced 1.4%.
Market sensitivity to trades is particularly acute Monday given the extremely light volume, said Mark Kepner, managing director of sales and trading at Themis Trading, in an interview.
"I think it's a combination of a Monday in August -- even more so because we're through earnings season -- plus you have Jackson Hole this week," Kepner said, adding that many traders seem to be hanging on the sidelines ahead of that event. The Kansas City Fed's Jackson Hole symposium in Wyoming runs from Thursday to Saturday this week, with appearances by Fed Chairwoman Janet Yellen and European Central Bank President Mario Draghi.
At midday, volume on the New York Stock Exchange stood at 1.47 billion shares, while volume on the Nasdaq was 909 million shares.
Month to date, average volume for the NYSE has been 3.21 billion shares, while average daily volume for the Nasdaq has been 1.88 billion. Total composite volume is 6.16 billion shares. All are below the year to date average, according to Dow Jones data.
Some analysts suggested that geopolitical tensions and political turmoil in Washington have been preventing the market from recovering after recent bout of volatility.
"Even though the S&P 500 is currently only 2.2% below its Aug. 7 all-time high, the market's current technical action points to the possibility of a decline of deeper proportions," said Sam Stovall, chief investment strategist at CFRA, in a note Monday.
Stovall said the erosion in price momentum of the cyclical sectors, such as technology and financials that had been leading the recent rally, have been adding to the downbeat sentiment.
Other analysts said geopolitical threats will continue to dampen risk appetite among investors.
"With earnings season coming to an end, there is not much to be bullish about right now," said Richard Perry, a Hantec Markets analyst, in a note Monday.
"Market sentiment is fairly negative with geopolitical risk still elevated on the Korean Peninsula," Perry said, adding that "the political risk of Trump's presidency remains a driving factor."
A new cycle of escalation near the Korean Peninsula looked set to begin as the U.S. and South Korea on Monday kicked off annual military exercises (http://www.marketwatch.com/story/tensions-expected-to-rise-as-us-south-korea-start-annual-war-games-2017-08-20) that have a history of enraging North Korea.
President Donald Trump is due to lay out a path for U.S. strategy in Afghanistan (http://www.marketwatch.com/story/trump-to-announce-new-strategy-for-us-in-afghanistan-2017-08-20) in a nationally televised speech Monday night. On Tuesday, Trump is scheduled to speak at a campaign-style rally in Phoenix as he tries to move on from his much-criticized response to the white-supremacist violence in Charlottesville, Va.
Other markets:Oil futures (http://www.marketwatch.com/story/oil-in-holding-pattern-as-opec-meets-about-cheating-on-output-deal-2017-08-21) and the ICE U.S. Dollar Index drifted lower, while gold futures (http://www.marketwatch.com/story/gold-inches-closer-to-1300-as-us-north-korea-tensions-return-2017-08-21) advanced. European equities lost ground (http://www.marketwatch.com/story/fiat-maersk-shares-shine-in-lackluster-european-stock-market-2017-08-21), while Asian markets closed mixed (http://www.marketwatch.com/story/australia-japan-lead-asian-market-decliners-2017-08-20). The yield on the 10-Year Treasury (http://www.marketwatch.com/story/treasury-yields-slightly-lower-as-investors-gear-up-for-jackson-hole-2017-08-21) declined to 2.183%. Yields and bond prices move inversely to one another.
Deal news: Shares in Sempra Energy(SRE) rose 1.1% following news the San Diego Gas & Electric parent has reached a deal to buy Oncor for $9.45 billion, swooping in to snatch the power-transmission company (http://www.marketwatch.com/story/sempra-outbids-buffetts-berkshire-with-945-billion-deal-for-oncor-2017-08-21) away from Warren Buffett's Berkshire Hathaway Inc.(BRKA)
In European deal news, French oil giant Total SA(TOT) (TOT) has agreed to acquire Danish conglomerate A.P. Moeller-Maersk A/S's (MAERSK-B.KO) (MAERSK-B.KO) oil unit for $7.45 billion (http://www.marketwatch.com/story/total-buys-maersk-oil-unit-in-745-billion-deal-2017-08-21), the latest sign activity is returning to the sector following a three-year slump in oil prices.
Herbalife Ltd.(HLF) shares surged 11% after announcing a self-tender offer and confirming it recently held talks on a going-private transaction. The health products distributor said it has commenced a modified Dutch auction self-tender offer to buy for cash up to $600 million of its own shares.
Stocks to Watch: Shares of Foot Locker Inc.(FL) tumbled 6.7%, extending its slide on Friday, when the stock lost nearly a third of its value.
Shares of industrial miners were sharply higher. Freeport-McMoRan Inc.(FCX) was up 4.2%, while Newmont Mining Corp (NEM) was up 2.5%.
Ulta Beauty Inc.(ULTA) shares fell 3.6% after analysts at Stifel cut their price target (http://www.marketwatch.com/story/ulta-beauty-shares-slide-36-as-stifel-cuts-stock-price-target-by-17-2017-08-21) on the beauty products retailer.
U.S.-listed shares for Fiat Chrysler Automobiles NV(FCA.MI) (FCA.MI) traded 6.5% higher after China's Great Wall Motor Co. (2333.HK) reportedly expressed interest in buying (http://www.marketwatch.com/story/chinese-auto-maker-interested-in-buying-fiat-reuters-2017-08-21) the Italian-American car maker.
--Victor Reklaitis in London contributed to this article.
(END) Dow Jones Newswires
August 21, 2017 13:47 ET (17:47 GMT)
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